If you’re planning to fill up the tank this week, you might want to wait until Friday evening, a gas affordability expert is advising.
Dan McTeague, the president of Canadians for Affordable Energy, suggested that motorists hold off on gas purchases until after 6 p.m. on Friday, as retailers often subsidize prices based on the day’s total sales volume.
McTeague told the Star that average gas prices in the Greater Toronto Area sat at 183.9 cents per litre on Wednesday.
“Tomorrow they will drop 10 cents to 173.9 cents per litre for Thursday,” he said, adding that he expected prices to slide another two to three cents by Friday. If that trend holds, it would mark the lowest gas prices have been since April 24, McTeague noted.
The industry expert attributes that volatility to ongoing diplomatic talks between the U.S. and Iran, noting that markets have been fluctuating since Feb. 28, when the U.S. and Israel launched attacks on Iran as part of what the American government dubbed Operation Epic Fury. To McTeague, U.S. President Donald Trump’s ongoing negotiations have “everything to do with the price stock.”
“It’s gas prices by tweet, and rumour, not by economic fundamentals,” McTeague said. “The bottom line is that markets are simply reacting to the latest headlines. They’re not reacting to the hard numbers, which show roughly 1.4 to 1.5 billion barrels have disappeared.”
He warns that while prices may see short-term dips, they will likely remain elevated.
“The damage is done,” he said. “Demand has to come down in order for supply to recuperate — otherwise the greatest supply shortage that we’ve seen in our time is going to linger.”
What’s behind the price at the pump
Over recent months, surging gasoline prices due to the war in Iran have pushed prices of most goods higher across the country, according to Statistics Canada. Canada’s annual inflation rate increased to 2.8 per cent in April, the highest level in nearly two years.
Even though Canada is the world’s fourth-largest oil producer, the price at the pumps is shaped by a global system that spans trading routes in the Middle East to the tickers on Wall Street.
The price of gasoline isn’t a figure decided overnight, but is rather made up of a sum of moving numbers that begins with the price of oil, which is eventually processed into gasoline.
Organizations and major banks publish forecasts on future oil demand based on factors such as economic growth and seasonal consumption patterns.
Traders and oil companies then use the forecasts to help decide how much oil might be needed in the near future, influencing the market expectations and in turn, prices.
“It’s like a stock market,” according to economist Jim Stanford. “Investors are making bets on what’s going to happen next.”
The balance between global oil supply and demand has been especially disrupted by geopolitical tensions in recent months. The partial shutdown of the Strait of Hormuz, a key shipping route for oil, has taken a significant share of global supply offline, pushing prices higher.
With files from Anastasia Blosser
